An Administrator's Guide to California Private School Law

Chapter 19 – Fundraising

increase the amount of funds and donations raised through a fundraising campaign. To protect schools from unscrupulous fundraising practices, schools must comply with specific requirements (see Subsection C. below) when hiring and utilizing the services of a third party entity or expert to assist with fundraising. A. C OMMERCIAL F UNDRAISERS Nonprofit corporations can hire a Commercial Fundraiser for Charitable Purposes to assist with their fundraising and solicitation endeavors. A Commercial Fundraiser is any outside or third party individual, corporation, or other legal entity who, for compensation, does any of the following: (1) solicits funds or assets for charitable purposes; (2) receives or controls solicited funds or assets; (3) employs or engages any compensated person to solicit, receive, or control solicited funds or assets; or (4) plans, manages, advises, or prepares materials related to fundraising and solicitation, but does not qualify as Fundraising Counsel for Charitable Purposes. 2520 Commercial Fundraisers must, prior to soliciting any funds or assets, or receiving or controlling any solicited funds or assets for a school, register with the Attorney General’s Registry of Charitable Trusts, and annually renew that registration. 2521 Schools may not contract with any Commercial Fundraiser to perform fundraising services, and may void any already signed contract, if the Commercial Fundraiser is not registered with the Attorney General’s office. 2522 Commercial Fundraisers must also file a report with the Attorney General’s Registry of Charitable Trusts at least 10 working days before starting a new soliciting campaign. 2523 This report must identify the parties involved in the solicitation campaign, the fundraising methods, and the projected dates of performance. 2524 B. F UNDRAISING C OUNSEL Nonprofit corporations can alternatively hire an third party entity known as Fundraising Counsel for Charitable Purposes. Fundraising Counsel help plan, manage, advise, consult, counsel, or prepare materials for solicitation of funds or assets for charitable purposes. 2525 Schools compensate Fundraising Counsel for their services, but schools cannot base that compensation on the percentage of funds raised in the fundraising campaign. 2526 Fundraising Counsel do not solicit funds or assets, do not receive or control solicited funds or assets, and do not employ or engage any compensated person to solicit, receive, or control solicited funds or assets. 2527 Moreover, a third-party individual or entity would not qualify as Fundraising Counsel if he/she/it is (1) an attorney, investment counselor, banker, or trustee of the nonprofit corporation; (2) employed by another Fundraising Counsel; (3) merely prints, reproduces, or prepares graphics for written fundraising materials, or (4) receives less than $25,000 in total annual gross compensation for Fundraising Counsel services. 2528 If a third party hired to assist with fundraising solicits or controls funds, or does not qualify as Fundraising Counsel based on their relationship to the nonprofit corporation or otherwise, that third party would be a Commercial Fundraiser. Similar to a Commercial Fundraiser, Fundraising Counsel must also, prior to performing its fundraising services, register with the Attorney General’s Registry of Charitable Trusts and

An Administrator’s Guide to California Private School Law ©2019 Liebert Cassidy Whitmore 608